Post-APRA - is it possible to start building a sizeable portfolio on a PAYG salary?

You don't need a 10m portfolio to become financially free.
You many only need 3-4 purchases throughout your working career to generate enough equity to sell down part of the portfolio and still make a modest amount of passive income overall.

The idea of a large portfolio is founded to me on the basis of ego. Or to a lesser extent a "shotgun approach" as some clearly don't have an end game in mind, so it's just "keep buying more property" to them. What the should be doing is looking st their end game, what do they have now and how do I need to tweak my next purchase to refine my portfolio so that I may reach my goal.

One of my favourite sayings is " turnover is vanity, cashflow is king"...

 

It indicates Australia's regulators have further to go... by 2018

 

is not the end game for many.... but yes, cash flow is KING

 

Well, the sub 100K should be able to invest unabated. To create wealth. Wealth is good for the nation and should not be favoured to high income earners.

APRA rules are discriminatory against lower income property investors.

Loooong way off, if ever. Anyway, many investors realise their capital gains along the way, pay CGT and pump money back into the economy via spending.

lol.

Still easy for the high income earners.

 

APRA is "discriminating" against lenders who had been facilitating ( in their view) irresponsible, speculative lending to over 50% of all borrowers on an I/O basis. How the banks have responded has varied. If you earn less than 100K and want the same kind of servicing you got pre APRA, go to Liberty or Qudos.

sub 100K lending unabated? I/O expiry a long way off? Higher income earners not affected?

Im going to have to agree to disagree on all points. This is probably why "taxi drivers" shouldnt be allowed to run anything other than the vehicle they are steering

 

@euro73 - are the above the last couple of lenders who take actuals?
And if so, do you think they will remain that way or will they eventually change their lending criteria like the rest of them?

 

Ha. if I could answer that, I'd be called nostrodamus not Euro My instinct? My gut? My prediction? They probably cant retain those policies for much longer... Qudos has already dropped the LVR for deals where you can use actuals from 90% to 80% and now to 65% - in the space of the last 4 weeks. But Liberty arent an ADI so they will not come under the same pressures as Qudos. They may hang around a while... and Pepper takes actuals + 28% which is quite handy as well...

The only thing I can tell you for certain is that you aren't going to enjoy the same credit expansion as the generation of investors whose successes you hope to emulate, so you need to think long and hard about the methods they used successfully, what made those methods successful for them ( was it really all about their skill in picking cycles, or was it just as much or more about easy credit availability that made it happen for them ?) and whether what was available to them will be available to you ie will copying them produce the same results for you?

I have written tens and hours worth of contributions to these forums about why I believe the answer to that is a resounding NO. It's not rocket science. when you take capacity away from a large percentage of the total participants/players in a market , momentum slows. Then when you ensure capacity will remain reduced even for the new participants/players entering, you ensure momentum remains slowed because the new players cant take up where the earlier players left off . Call it what you want; a lid. a barrier. a choke point. a threshold. It's still a ceiling. And a ceiling is a ceiling is a ceiling is a ceiling. And that has never existed for the generation you want to emulate. It is as simple as that.

I treat property growth as a by product of credit availability. And I understand credit - where it comes from, how it arrives at a customer as a mortgage, how it is regulated etc etc etc - better than just about anyone else here. I have been ahead of the curve and on the money every time, without exception, on all the impacts of the regulatory intervention so far.

So for me, fussing or oscillating over what "might" happen is crazy. It has already happened. ie We already know what "is" happening. And I have written about what is going to happen by 2018. so for me, to be procrastinating now is only going to ensure that I end up starting sentences with shoulda, woulda, coulda type arguments down the road .... so get yourself set up now while you still can would be my strong position

#now.while.you.still.can

Get the extra cash flow into your portfolio now. Let go of that utopian CG property deal you think is going to make you rich, and accept that equity holds little value without cash flow to put it to work. Equity may be the plastic explosive, but until you insert the cash flow fuse into it, its a useless stick of jelly.

Get cash flow. get debt down. grow a larger portfolio. Let time and compound deliver the outcome. win the end game.

 

Liberty or Qudos. Thanks @euro73 That's 50% off any taxi fare you have with me (subject to T & Cs) lol.

 

are you talkin' to me?

Just dont use Liberty or Qudos too early... leave it until last

 

Uber?!? May the fleas from 1000 camels invade your armpits!

 

If you have extracted $75k equity, the property value is $400,000, and 6% of that is $24,000, over 30 properties is $720,000.
It services, with room to spare.

Someone on $220,000pa is going to run out of equity/capital growth long before capacity to service.

 

@Taku Ekanayake how long do you want to wait?

On a PAYG income, aiming for monster renos and 8-9% yields minimum may give you a fighting chance.

But imagine what you could do if you put the same energy, focus and time into developing and growing a business?

 

I know what you're trying to imply there @Steven Ryan

 

This is gold

 

Thanks for the great analogy @euro73

 

oops...they're onto us...

 

That's a nice little block that caught my eye but can't do it at the moment...good agent too (IMO)